Bloom Energy Brings AC/DC (Debate) to Japan Stage

U.S. fuel cell firm Bloom Energy Corp. and Japanese Internet and telecom group SoftBank started up their first power generation system in Japan under a joint venture earlier this week.

Mayumi Negishi/The Wall Street Journal

Bloom Energy Corp. CEO K.R. Sridhar, second from left, and SoftBank Corp. CEO Masayoshi Son, third from left, pose at a news conference in Fukuoka, southern Japan, at the first installation of a Bloom Energy fuel cell system outside the U.S.

But the modest, 200-kilowatt system installed to supply 75% of the needs of a 21-story highrise in the southern city of Fukuoka is just the first step toward an industry-changing goal for the two companies’ big-thinking chief executives.

K.R. Sridhar, founder and CEO of Bloom Energy, made clear his ambitions go beyond powering individual buildings during his comments on Monday. Not only does he want to distribute power in Japan, he said he wants someday to distribute direct current power, as opposed to the existing power industry standard of alternating current.

The Fukuoka contract is the Silicon Valley-based startup’s first move outside the U.S. and a toehold in Asia, where carbon dioxide emissions have more than doubled in the 20 years to 2010. Bloom Energy sees a need to cut those levels and therefore a market for its emissions-cutting systems.

But Japan could also be the place where Bloom Energy, already a supplier of 100 megawatts per hour of power to companies such as Google Inc. and eBay Inc., does away with the inefficiency of supplying alternating current power into the direct current power used by many contemporary devices, by generating direct current power at the outset, Mr. Sridhar said.

“I would like to see Japan be the first place where we produce DC power,” Mr. Sridhar told reporters in Fukuoka on Monday. That would help avoid the 10% or so of power that is lost when electricity is transformed from AC into DC, he said. Bloom Energy’s systems can generate power in either AC or DC.

It’s a goal that would dovetail nicely with SoftBank’s recent interest in energy and in transforming the way power is distributed in post-Fukushima Japan.

The two companies said they hope to sell 30,000 kilowatts-per-hour of power generation capacity over the next three years in Japan.

Ever since Thomas Edison lost out in his battle to promote direct current power to his rival George Westinghouse’s alternating current, AC has been the power industry standard. One of the principal reasons for AC’s dominance is its ease of transmission over long distances from power stations to people’s homes.

But the world is becoming increasingly direct current-powered. Digital devices from PCs to smartphones to flat TVs use direct current power. That’s why the power cords you use to plug your devices into wall sockets have converters to turn the alternating current into direct current.

Solar panels, LED lights, and electric vehicles also use direct current power. Data centers that operate Internet networks need DC power for their computers.

Each time AC is transformed into DC, some power is lost. So in a DC-users world, there’s an argument for generating direct current electricity in the first place to avoid this power loss.

And for resource-poor Japan, wasted energy is particularly significant.

Bloom Energy’s fuel cells offer a stable source of power that generates fewer carbon dioxide emissions for about ¥28 per kilowatt hour. That’s still high, compared with electricity generated at a gas-powered power station, which costs about ¥11 per kilowatt hour. But Bloom’s carbon dioxide emissions are about half those produced by Japanese gas companies supplying the grid.

Officials at local unit Bloom Energy Japan said costs could soon fall to around ¥23 per kilowatt hour on planned imports of shale gas from the U.S. and Canada. Bloom Energy’s solid oxide fuel cells convert fuels, ranging from diesel and natural gas to biofuels, into electricity by mixing them with oxygen through a chemical process.

Among other signs of interest in DC power in Japan, Nippon Telegraph & Telephone Corp. is already using DC-powered data centers. Japanese municipalities are showing interest in both Bloom Energy’s fuel cells and DC power, Bloom Energy officials said.

At its heart, the AC/DC debate is about how power generation and transmission can be decentralized in Japan, and how companies and factories can lower their reliance on the grid.

In teaming up with Bloom Energy, SoftBank Chief Executive Masayoshi Son envisions a free market of electric power, in which companies and individuals buy and sell power in a seamless, real-time grid.

“It’s wrong that we should be reliant on massive power generators that can cause havoc when an accident occurs,” said Mr. Son, who has embraced energy issues since the Fukushima nuclear disaster, launching a series of large-scale solar power projects. “Power should be decentralized,” he said.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.